fliprent

Are you able to sell the houses once they are completed?  I get this question quite a bit lately and a good question it is.  The answer quite honestly is yes, but it can take a while.  Many real estate economists predicted the current real estate market years ago.  Investors should have formulated a plan B from the start, but especially within the last 2 years. 

Plan B

From the first signs of downturn, plan B went into action.  My plan B is very simple, rent some sell some.  I rent the houses that I know I will turn a profit.  Lease options are another great way to profit from the current market.  If the lessee decides to exercise her option to purchase, you’ve created a winning formula.  I can sell when the market begins an upswing or I can go to market now and wait for a buyer.  It really depends on the location of the property. 

You make money when you purchase the property and this is a buyers market.  What better market to buy low, make a reasonable profit from renting and sell later.  This is one of the factors that inspired the name of my blog fliprent.  Another effect of the current market is the plethora of renters that it created.  The middle class can no longer qualify for a loan and recent college grads and first time homebuyers are in the same boat.  I’m certainly not the only investor that knows this but I may be one of few that have combined flipping houses and renting them as a methodology.

Urban Renewal

There are several reasons why plan B works for me.  One reason is called Urban Renewal.  Although, the economy is in a downturn the urban areas are still the hottest places to live.  People are moving back into the city in considerable numbers and so are businesses.  If you live or work in an urban area practically anywhere in the country, you have noticed this revitalization.  The modernization of previously hazardous blocks into corridors overflowing with small businesses, restaurants, and cafes are hard to miss.

The key to success in this business has not changed.  If you are using a rehab loan or hard money lender, you may need to refinance after a year.  Plan to complete the rehab and locate a renter within the one year time frame.  When you go back to refinance, having a renter already in the property will lower your debt.  As always, buy low, do your research, and most importantly enjoy what you are doing.

Now is the Time

According to real estate economists, current interest rates are at a 40 year low.  That cannot last says economist Mark Dotzour, chief economist of the Real Estate Center at Texas A & M University.  “Inflation is clearly rampant all over the world, including in the United States,” he said. “When inflation is a problem, mortgage rates go up. Rates probably should be much higher right now, but they aren’t.”  Eventually rates will increase and if prices do not fall enough, there will be many folks left in the cold.  If you are looking for a permanent residence, refinance or invest, the time to try is now.  The combination of a buyers market and low interest rates may not come around again.